ELECTORAL BONDS
Background:
Previously no corporate company was allowed to make donations amounting to more than 7.5% of their total profit or 10% of revenue.
Not only that, there is a statutory requirement for political party receiving donations, to declare information (make public) of all donations in excess of Rs 20,000.
Inspite of these restrictions ,the old practice of under-the-table donations were prevalent and this electoral bond was introduced to serve as good measure towards transparency in political funding. electoral bond schemes were introduced by government by bringing amendments to following Acts via Finance Act of 2016 and 2017.
Amended Acts are:
· Representation of the People Act, 1951, (RPA),
· Companies Act, 2013, the Income Tax Act, 1961,
· Foreign Contributions Regulation Act, 2010 (FCRA),
· Income Tax Act 1961,
What is electoral bond?
Introduced in 2018, the Electoral bonds are interest-free bearer bonds or money instruments issued by authorized bank. These bonds are Issued in Denominations of ₹1000, ₹10000, 1 Lakh, 10Lakhs and 1 Crore. Eligible Donors wanting to contribute to political parties of their choice can approach the authorized bank and purchase the bond.
Companies and individuals in India who are eligible donors, can purchase/ subscribe to these bonds from any of the 29 authorized branches of State Bank of India (SBI), through a KYC-compliant account via cheque and digital payments.
The instrument being bearer bonds, There is no ceiling limit on the number of electoral bonds that can be purchased.
Particulars of the donor ie Name or any other information are not entered on the instrument and thus electoral bonds are said to be anonymous to everyone except SBI who will have the particulars as obtained as per KYC norms.
Identity of donor is kept confidential thereby reducing the risk of intimidation from other political parties or rivalry with stake holders due to donor's political affiliations.
Who were eligible to receive donations under electoral bond:
- Political parties, that secured at least 1% of the votes polled in the recent Lok Sabha or State Assembly elections and
- registered under the RPA
can get a verified account from the Election Commission of India (ECI). The bond amounts are deposited in this account within 15 days of their purchase and the concerned political parties that are beneficiary of the donation have to encash them within a stipulated time of 15 days, otherwise the donation amount gets deposited in PM relief fund.
Availability:
These bonds were available for purchase for a period of 10 days each in the month of January, April, July and October) and additional 30 days is provided during the election years.
In November 2022, electoral bond scheme was amended to increase the sale days permitted from total of 70 days to a total of 85 days in the year where any assembly election may be scheduled.